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Owings v. Hunt & Henriques

September 3, 2010


The opinion of the court was delivered by: M. James Lorenz United States District Court Judge


In this fair debt collection practices action, Plaintiff claims, among other things, that Defendants obtained a default judgment against him to collect a debt based on untrue representations to the court that he was not in the military service. At the time, Plaintiff was in active service with United States Army National Guard. He claims that Defendants violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. ("FDCPA") and the California Rosenthal Fair Debt Collection Practices Act, Cal. Civ. Code § 1788 et seq. ("Rosenthal Act"). The parties filed cross-motions for summary judgment. Based on the reasons which follow, each motion is GRANTED IN PART AND DENIED IN PART.

Plaintiff argues that he is entitled to summary adjudication in his favor on the issue of Defendants' liability. Defendants oppose this contention and argue that a judgment should be entered in their favor because Plaintiff presented no evidence of causation or damages, and because they are entitled to the bona fide error defense.

Federal Rule of Civil Procedure 56 empowers the court to enter summary judgment on factually unsupported claims or defenses, and thereby "secure the just, speedy and inexpensive determination of every action." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 327 (1986). "If summary judgment is not rendered on the whole action, the court should, to the extent practicable, determine what material facts are not genuinely at issue." Fed. R. Civ. P. 56(d)(1).

Summary judgment or adjudication of issues is appropriate if the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). A fact is material when it affects the outcome of the Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A "genuine issue" of material fact arises if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id.

The burden on the party moving for summary judgment depends on who bears the burden of proof at trial. "When the party moving for summary judgment would bear the burden of proof at trial, it must come forward with evidence which would entitle it to a directed verdict if the evidence went uncontroverted at trial. In such a case, the moving party has the initial burden of establishing the absence of a genuine issue of fact on each issue material to its case." See C.A.R. Transp. Brokerage Co., Inc. v. Darden Restaurants, Inc., 213 F.3d 474, 480 (9th Cir. 2000) (citations omitted). When the moving party would not bear the burden at trial, then he or she can meet its burden on summary judgment by pointing out the absence of evidence with respect to any one element of the claim. See Celotex, 477 U.S. at 325.

If the movant meets its burden, the burden shifts to the non-movant to show summary adjudication is not appropriate. Celotex, 477 U.S. at 317, 324. The non-movant does not meet this burden by showing "some metaphysical doubt as to material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). The non-movant must go beyond the pleadings to designate specific facts showing there are genuine factual issues which "can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson, 477 U.S. at 250.

When ruling on a summary judgment motion, the non-movant's evidence is to be believed, and all justifiable inferences are to be drawn in its favor. Anderson, 477 U.S. at 255. Determinations regarding credibility, the weighing of evidence, and the drawing of legitimate inferences are jury functions, and are not appropriate for resolution by the court on a summary judgment motion. Id. Only admissible evidence may be considered in deciding a motion for summary judgment.*fn1 See Fed. R. Civ. P. 56(e).

The mere fact the parties filed cross-motions "does not necessarily mean there are no disputed issues of material fact and does not necessarily permit the judge to render judgment in favor of one side or the other." Starsky v. Williams, 512 F.2d 109, 112 (9th Cir. 1975). "[E]ach motion must be considered on its own merits." Fair Hous. Council of Riverside County, Inc. v. Riverside Two, 249 F.3d 1132, 1136 (9th Cir. 2001). Furthermore, the court must consider evidence submitted in support of and in opposition to both motions before ruling on either one.

Plaintiff allegedly failed to pay a credit card debt owing G.E. Money Bank. The issue whether the debt was Plaintiff's is disputed and is not a part of this case. It is undisputed, however, that the account was in Plaintiff's name. (Joint Statement of Undisputed Fact in Supp. of Parties' Cross Mot. for Summ. J. ("Joint Statement") at 1-2.) Defendant Arrow Financial Services ("Arrow") acquired the account. Arrow engaged Defendant Hunt & Henriques ("Hunt"), a law firm, to collect it.

Plaintiff claims that in attempting to collect the debt from him, Defendants violated the FDCPA and the Rosenthal Act. The parties agree that the FDCPA applies insofar as Plaintiff was a consumer, Defendants were debt collectors, and the underlying obligation was a debt as the terms are defined in the statute. (Joint Statement at 1.)

With respect to the Rosenthal Act, the parties agree that Plaintiff was a debtor, the debt at issue was consumer credit, and Arrow was a debt collector as these terms are defined by the statute. (Joint Statement at 1.) They disagree, however, whether the statute applies to Hunt.

The definition of "debt collector" under California Civil Code Section 1788.2(c) expressly excludes "an attorney or counselor at law."*fn2 A creditor's counsel retained for the purpose of collecting a debt is not a "debt collector" within the meaning of the Rosenthal Act. Carney v. Rotkin, Schmerin & McIntyre, 206 Cal. App. 3d 1513, 1518, 1526 (1988). In Carney, the action, which included violations of the Rosenthal Act, was filed against the creditor, the law firm retained by the creditor, an attorney and a secretary of the law firm for actions taken by the law firm in collecting the debt. 206 Cal. App. 3d at 1518. The court held that dismissal of the claim was proper as to all defendants because attorneys are not subject to the Rosenthal Act. Id. at 1526. Plaintiff's argument that the Rosenthal Act excludes attorneys but not law firms is therefore rejected. Hunt cannot be held liable under the Rosenthal Act.*fn3

The parties also disagree whether Arrow can be held vicariously liable for Hunt's FDCPA violations. Defendants argue that Arrow cannot be held vicariously liable because Plaintiff presented no evidence that Arrow exercised any control over Hunt in collecting the debt. This argument is rejected. In the FDCPA context, "Congress intended the actions of an attorney to be imputed to the client on whose behalf they were taken." Fox v. Citicorp Credit Serv., Inc., 15 F.3d 1507, 1516 (9th Cir. 1994). It is undisputed that Hunt's actions in attempting to collect were on Arrow's behalf. (Joint Statement at 2 & Ex. U (Dep. of Tonia Easterling at 79); see also Ex. T.) Accordingly, to the extent Hunt is held liable for any FDCPA violations in collecting the debt, Arrow is vicariously liable.

It is undisputed that Hunt filed a lawsuit against Plaintiff in San Bernardino Superior Court, alleging Plaintiff failed to pay the debt. Hunt based its choice of venue on an address which was not Plaintiff's residential address. At the time the lawsuit was filed, Plaintiff did not reside in San Bernardino County. (Joint Statement at 1.) The FDCPA requires, and the parties do not dispute, that under the circumstances of thus case, the action should have been filed in the Riverside County where Plaintiff resided. See 15 U.S.C. §1692i(a). Accordingly, it is undisputed that the action was filed in the wrong venue under the FDCPA. "FDCPA is a strict liability statute in that a plaintiff need not prove an error was intentional." Reichert v. Nat'l Credit Sys., Inc., 531 F.3d 1002, 1004 (9th Cir. 2008); see also id. at 1005 ("The FDCPA makes debt collectors liable for violations that are not knowing or intentional.") To the extent Plaintiff seeks summary adjudication of the issue that Defendants violated 15 U.S.C. Section 1692i(a), his motion is GRANTED.

The proof of service filed in the action states that Plaintiff was served at 568 Casey Court in Colton, California by substituted service on March 22, 2008. (Ex. M). However, at that time, Plaintiff resided in a different county at a different address -- 34581 Sagebrush Lane, Winchester, California. (Ex. W, Joint Statement at 1.) Plaintiff claims that he was not properly served. Because he does not contend that this violated the FDCPA, the claim is based entirely on the Rosenthal Act. (See Pl.'s Opp'n to Defs' Mot. for Summ. J. and Reply in Supp. of Pl.'s Mot. for Summ. J. (docket no. 33) at 4.) For the reasons discussed above, to the extent he seeks summary adjudication of the issue that Defendants violated the Rosenthal Act when they failed to properly serve him, his motion is DENIED.

Plaintiff did not appear in the collection action. On July 25, 2008 Hunt applied for a default judgment. In support of the application, Michael Hunt, a partner at Hunt, declared under penalty of perjury, "No defendant named in item 1c of the application is in the military service so as to be entitled to the benefits of the Servicemembers Civil Relief Act (50 U.S.C. ยง 501 et .)." (Ex. F & Joint Statement at 3.) No other declarations were filed regarding Plaintiff's military status, and Defendants did not advise the court about it in any other way. On July 30, 2008 a default judgment was entered against Plaintiff. At all relevant times, Plaintiff was in ...

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